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OPEC, the 12-member oil cartel, is meeting once again to discuss their game plan for production on Friday in Vienna.
But while the cartel’s decisions over the past year looked pretty clear-cut, things aren’t on such firm ground this time around.
“The interests of member countries have perhaps never been so far apart,” writes Helima Croft, global head of commodity strategy at RBC Capital Markets. “While disagreements were evident at the June meeting, discontent with the pseudo-consensus appears more dire, with the low price environment further stressing the already highly stressed members of the cartel.”
Notably, Libya, Iraq, Nigeria, Algeria, and Venezuela — the “fragile five,” as Croft calls them — remain very high at risk, especially as Libya and Iraq are on the front lines of war.
As such, take a look at how each OPEC member is weathering geopolitical, economic, and security risks at the moment. The countries are listed from least to most high risk, with 10 being the highest.
Kuwait has a bunch of shock absorbers to protect it from lower oil.
Risk for next year: 2
Oil production last month: 2.82 mb/d
Oil production in July 2015: 2.83 mb/d
Kuwait has a high reserve-to-population ratio, “which has enabled it to survive the lower-for-longer environment relatively unscathed,” writes Croft. But Kuwait’s economy is more levered to oil than any other OPEC member — at nearly 60% of GDP.
Notably, on Sunday Kuwait named its finance minister, Anas Al Saleh, as acting oil minister.
Source: RBC Capital Markets
Qatar is more reliant on gas/LNG exports.
Risk for next year: 2
Oil production last month: 0.64 mb/d
Oil production in July 2015: 0.67 mb/d
Qatar has been able to remain “comfortable” in the short term — even with lower oil — because of its significant public finances. Additionally, it’s the least reliant on oil out of all the OPEC members, instead focusing on gas/LNG exports.
“Qatar’s challenge will emerge later this decade,” notes Croft.
Source: RBC Capital Markets
The United Arab Emirates sits in the “sweet spot.”
Risk for next year: 2
Oil production last month: 2.97 mb/d
Oil production in July 2015: 2.80 mb/d
The UAE’s fiscal and external buffers have helped limit the spillover effect from lower oil.
Moreover, “while the country is expected to record a deficit of 2.9% this year based on a $61.50/bbl oil price (the first since 2009), 2016 will likely see a return to surplus,” notes Croft, citing IMF figures.
Source: RBC Capital Markets
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